Employer what do with the amount which was deducted from employee's salary for being late or absent from work?

Employer what do with the amount which was deducted from employee's salary for being late or absent from work?

Hi,

Might not build a Bungalow for their dwelling !

In normal course for late comers if they are very habitual late comers then for the 3rd late either .5 day leave will be deducted. In the absence of leave balance only some employer will go salary deduction. Many Employers use to be very lenient but when things are taken for granted only Employers are forced to implement such penalties. Their intention is not recover money from you but their concern is such late comers should become precedent for others.

For the day of absence if you are deducting that day's salary, it is a deduction for absence of work and there is no amount 'gained' by the employer and it will reflect in the pay sheet as such. It will be on this amount that you will pay ESI, PF etc. But imposing a fine for late coming is different. Though it is reflected in the pay sheet as a recovery from the employee his salary for the day will remain the same. Such amounts, ie, fine imposed should be utilised for labour welfare activities of the company. If you do not have any such welfare fund, you can deposit it with the labour Welfare Fund of the government.

To my understanding, pay not paid for period of absence (not covered leave duly admissible/sanctioned) is not the pay deducted, but the pay not drawn.

Yes, it is not a "deduction" from the gross salary but the gross salary itself is arrived at after considering the day of absence or leave without pay. Fines, on the other hand, are deducted from the gross salary and as such all fines should be separately accounted and kept for use for employee welfare activities only.

In certain states like Madhya Pradesh, the fine amount deducted from salary or otherwise is to be deposited with Labour Welfare fund as per the statutory provision in this regard.

As our seniors have already explained, there could be two contexts:

(a) Not earned: It refers to an amount that an employee did not receive because they did not work during a particular period, such as when they are absent from work without leave or have not completed the required hours to receive full pay.

(b) Deducted: It refers to an amount that is taken away from an employee's wages as a form of punishment or disciplinary action. It is a reduction in the amount of wages owed to the employee, typically due to a violation of company policy or employment agreement.

If it is scenario (a) Not earned: The amount that you have not paid to your employees can be retained in the books of accounts.

If it is scenario (b) Deducted: The amount may be deposited to Labour Welfare Fund [Depends on respective state's rules]."

I agree with the observation of Mr.P.Venu.
' Late Coming ', if becomes habitual, tantamounts to a misconduct( may be of a minor nature). The common practice to correct this is the deduction of any admissible leave at the credit of the employee concerned @ one day in case of exceeding certain no. of late attendance during the month. In extreme cases, fine may be imposed by the employer subject to the provisions of section 8 of the Payment of Wages Act,1936, if applicable. There is an enabling provision u/s 22-F of the Minimum Wages Act,1948 to apply the provisions of the PW Act,1936 by means of a notification.
The fine amount thus collected shall be utilized for labor welfare measures as stated by Mr.Madhu subject to the approval of the authority under the PWA,1936 who is normally the Deputy Labor Commissioner for the area.